SEC still gets low response rate to diversity self-assessment

Of the 1,263 regulated entities the SEC identified in 2020 to participate in a voluntary diversity self-assessment, only 118, or 9%, responded, the agency said.

The data point came Monday as the Securities and Exchange Commission's Office of Minority and Women Inclusion, or OMWI, published its 2020 Diversity Assessment Report. In January 2020, the OMWI identified regulated entities, like money managers, registered investment advisers, broker-dealers and self-regulatory organizations, to participate in the report process, which includes entities conducting and submitting a voluntary self-assessment of their diversity policies.

Among 118 entities that responded, 98% said they include diversity and inclusion considerations as part of strategic plans for recruiting, hiring, retaining and promoting employees, the report found. Moreover, 70% of the responding entities take proactive steps to promote a diverse pool of candidates when selecting members of their board of directors or other governing body; 88% publish information about their diversity and inclusion efforts on their website; 55% maintain a list of qualified minority-owned and women-owned businesses that may compete for upcoming contracting opportunities; and 62% include the progress they have made toward achieving diversity and inclusion in their workforce, according to the report.

Since the vast majority of regulated entities did not participate in the report, the results may not be representative of the overall population, the OMWI noted in the report. The SEC said more participation is necessary to collect the greater depth of knowledge and information for a more comprehensive understanding of practices and policies for workforce and supplier diversity in the financial securities industry.

"Increasing workplace diversity and inclusion benefits all employees, and self-assessments provide a starting point for how to set and track financial industry goals," said Pamela Gibbs, director of the OMWI, in a news release. "By providing this framework for self-reflection, we engage regulated entities in a deeper analysis and understanding of the leading practices and policies for advancing workforce and supplier diversity. But to effectively help them achieve their diversity and inclusion objectives, we need greater participation in this self-assessment process."

In 2018, in the first iteration of the diversity assessment report, the SEC garnered a 5% response rate.

Some stakeholders, including Robert Raben, executive director and founder of the Diverse Asset Managers Initiative, have called on the SEC and Chairman Gary Gensler to do more to bolster participation in the report.

"Credit is due to the OMWI office at SEC for keeping this important focus on diversity in the financial sector alive," Mr. Raben said in an email Tuesday. "But, if only 118 of 1,263 registered entities bother to answer their regulators' questions about diversity, then this is a charade. The SEC commissioners need to say they won't take meetings with any registered entity that doesn't bother to answer a survey about its own diversity; that would be leadership."

The Diverse Asset Managers Initiative is a consortium of financial services professionals, institutional investors, corporate and philanthropic board members and trade associations that aims to boost the number of diverse-owned asset management firms and increase their assets under management.

For its part, OMWI said in the report that it will continue to prioritize increasing the response rate through outreach and awareness campaigns. It plans to "host outreach events focused on setting forth the business case for submitting a self-assessment from both the SEC's perspective, as well as the perspectives of entities that have previously submitted self-assessments." Also, it will "engage in listen-and-learn sessions to provide entities an opportunity to identify and discuss concerns surrounding the self-assessment process and ways to increase self-assessment response rates," the OMWI said in the report.